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Q. It is impossible for economic growth in a small country to lower that country's economic welfare, regardless of the bias of the growth. Explain.
Answer: This is a true statement that the reason economic growth may possibly hurt a country is if the terms of trade effect counters and dominates the growth effect. In the case of the miniature country there are no terms of trade effect.
Q. Illustrate why Argentina, one of the world's richest countries at the begning of the twentieth century, has become progressively poorer relative to the industrial countries. [
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